Property developer Dexus posts $1.5bn loss, real estate mutes ASX gains

A major commercial property player has taken a huge financial hit, as negativity around iron ore leaves room for investors to pounce.

The Australian materials sector has snapped a six-day losing streak on the back of bargain-hunting in the big miners.

The ASX200 closed at its highest mark since August 1 on Tuesday, gaining 0.22 per cent to 7,997.7.

Deals to be had in the mining sector on the back of sinking iron ore prices, and gains in technology, were enough to outweigh huge losses in the property sector on the local market.

Property investor Dexus dumped a massive $1.58bn statutory loss in its full-year results. The firm’s total portfolio value slid 12 per cent because of high interest rates, and the continuing lag in the commercial property sector.

Dexus is developing Waterfront Brisbane, which has locked in Deloitte, DLA Piper, Allens, Minter Ellison, Gadens and Colliers as tenants. Picture: Supplied

Accordingly, Dexus shares shed 8.9 per cent to $6.83. Real estate was the worst performing sector on the day, losing 1.55 per cent. Goodman Group dropped 1.4 per cent to $33.41, and Charter Hall Group lost 3.4 per cent to close at $12.10.

Australian banks have started cutting their term deposit rates, signalling a bet on the RBA cutting rates soon. Lending rates haven’t been dampened though.

The Australian Dollar is making up lost ground on the greenback. Picture: iStock

Capital Economics ANZ economist, Abhijit Surya, said a key reason behind the RBA’s hawkish messaging is markets had recently been “running away with the narrative” that rate cuts would be on the table before year-end, leading to a “loosening of financial conditions”.

It may pay to have a bet each way, as the RBA’s minutes released Tuesday use the words “uncertain”, “uncertainty” or “uncertainties” 13 times to explain the economic factors it is trying to wrangle with.

Nonetheless the Australian Dollar has made back almost all the losses it sustained in a sell-off beginning last month, as the risk of a US recession fades and Wall Street prepares for the Federal Reserve to cut next month.

Alcoa made a 4.9 per cent gain on the ASX on Tuesday. Picture: Supplied

The Aussie Dollar has risen above US$0.6730 for the first time in a month, rebounding 5.1 per cent since early August.

IG analyst Tony Sycamore said markets here and stateside were gearing up for the US rate cut.

On local markets, shrouded in grim Chinese steel production forecasts, deflated prices in the big miners attracted buyers on Tuesday, Mr Sycamore said.

The ASX materials sector has been on a steady three-month decline - and a six-day losing streak - but made forward progress Tuesday, up 0.92 per cent.

Alcoa made a 4.9 per cent leap (to $50.35) while Evolution Mining, South32 and Fortescue each gained more than 1.4 per cent.

Yancoal withheld a dividend with an eye to major purchases in Queensland; Shareholders were not happy. Picture: iStock

On energy markets, Yancoal slipped hard to a two-month low, losing 14.5 per cent to $5.95.

Results released after market close on Monday signalled the firm is serious about buying Anglo American’s Queensland coal mines; so much so they will hold onto a $420m interim profit and not pay dividends.

Yancoal’s first-half revenue did fall 21 per cent, and profit was slashed 57 per cent as well.

Medical glove and protective surgical suit maker Ansell announced it had axed almost 10 per cent of its workforce in moves toward automation; Shares rose 8.8 per cent to $29.76.

Shares in baby and maternity products retailer Baby Bunting gained 8.8 per cent on the day to $1.66 on updated fiscal guidance.

Originally published as Property developer Dexus posts $1.5bn loss, real estate mutes ASX gains